Markets & Finance

CIBC World Keeps Buy on CIGNA

February 28, 2002

CIGNA Corp. (CI)does not expect the Justice Dept.'s investigation of one of its business units to result in material losses to the company's consolidated results. CIBC World keeps its buy rating on the health insurer.

Analyst John Szabo says the DOJ and the Office of the Inspector General are investigating the company's Lovelace Health Systems unit regarding Medicare cost reporting practices for the years 1990-99. While he believes the potential liability limited to $60-$115 million -- not material to the company's financial condition -- Szabo notes the stock lost $1.2 billion in market value on Feb. 28, when the news first hit the market. He maintains his thesis that CIGNA is a high quality company rebounding from a difficult 2001. The analyst sees $8.30 2002 EPS, rising to $9.10 in 2003. He has a $115 price target.